FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1996 COMMISSION FILE NO. 1-13648
BALCHEM CORPORATION
MARYLAND 13-2578432
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(STATE OF OTHER JURISDICTION OF (I.R.S EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
PO BOX 175 SLATE HILL, NY 10973
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (914) 355-5300
-------------------------
INDICATE BY CHECK MARK WHETHER THE REGISTRANT(1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES [ X ] NO [ ]
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE CLOSE OF THE PERIOD COVERED BY THIS REPORT.
3143691 SHARES COMMON STOCK
<PAGE>
BALCHEM CORPORATION
BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
3/31/96 03/31/95
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<S> <C> <C>
CURRENT ASSETS
CASH & INVESTMENTS ..................... 119,384 43,004
ACCOUNTS RECEIVABLE ................... 3,252,475 2,901,294
INVENTORIES ........................... 2,228,280 1,635,575
PREPAID EXPENSES ...................... 526,882 550,211
DEFERRED INCOME TAXES ................. 152,495 97,630
TOTAL CURRENT ASSETS ................ 6,279,516 5,227,714
PROPERTY, PLANT & EQUIPMENT
LAND .................................. 84,710 53,648
BUILDING .............................. 4,117,916 3,551,118
EQUIPMENT ............................. 9,853,472 9,457,997
TOTAL ................................ 14,056,098 13,062,763
LESS: ACCUMULATED DEPRECIATION ............. 6,333,337 5,581,422
NET PROPERTY, PLANT, EQUIPMENT ...... 7,722,761 7,481,341
OTHER ASSETS
LICENSE ............................... 11,719 13,594
FINANCING COSTS ...................... 14,917 20,553
GOODWILL .............................. 7,408 7,708
CUSTOMER LISTS ........................ 501,566 188,695
PATENTS, TRADEMARKS & REGISTRATIONS ... 252,789 199,997
OTHER ................................. 53,792 41,333
TOTAL OTHER ASSETS ................. 842,191 471,880
TOTAL ASSETS ............................... 14,844,468 13,180,935
LIABILITIES & STOCKHOLDER EQUITY
CURRENT LIABILITIES
PAYABLES (TRADE& ACCRUALS) ............ 2,702,972 2,134,680
NOTES PAYABLE ......................... 221,105 200,630
DIVIDEND PAYABLE ...................... 118
LINE OF CREDIT ........................ 230,000
CURRENT DEBT .......................... 467,474 510,336
CURRENT INCOME TAX .................... 208,761 184,388
TOTAL CURRENT LIABILITIES ........... 3,600,312 3,260,152
NOTES PAYABLE LONG TERM ............... 31,763 43,510
LONG TERM DEBT ........................ 2,512,000 2,924,000
DEFERRED INCOME TAX ................... 692,812 595,909
DEFERRED COMPENSATION ................ 120,189 85,684
TOTAL LIABILITIES .......................... 6,957,076 6,909,255
STOCKHOLDERS EQUITY
COMMON STOCK ........................... 209,559 208,004
PAID IN CAPITAL ........................ 1,767,108 1,710,852
RETAINED EARNINGS ...................... 5,910,725 4,352,824
TOTAL STOCKHOLDERS' EQUITY .......... 7,887,392 6,271,680
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ... 14,844,468 13,180,935
</TABLE>
<PAGE>
BALCHEM CORPORATION
STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE PERIOD ENDING MARCH 31, 1996 AND MARCH 31, 1995
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS .............................. 434,606 352,033
ADJUSTMENT TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
DEFERRED TAXES ............................ (15,312) (1,436)
DEPRECIATION & AMORTIZATION ............... 206,741 190,456
CHANGES IN ASSETS & LIABILITIES
ACCOUNTS RECEIVABLE ....................... (106,983) (313,017)
INVENTORIES ............................... (355,442) (333,701)
PREPAID EXPENSES .......................... 18,710 (110,285)
ACCOUNTS PAYABLE .......................... 207,855 61,452
INCOME TAX PAYABLE ....................... 201,088 94,168
DEFERRED COMPENSATION ..................... 14,527 1,880
TOTAL ADJUSTMENTS .............................. 171,184 (410,483)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES ........................... 605,790 (58,450)
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENDITURES ...................... (112,719) (185,398)
INVESTMENTS IN OTHER ASSETS .............. (169,864) (61,734)
NET CASH USED IN INVESTING ACTIVITIES .......... (282,583) (247,132)
CASH FLOWS FROM FINANCING ACTIVITIES
NET BORROWINGS UNDER LINE OF CREDIT ....... (285,000)
NOTES PAYABLE ............................. (132,663) (26,025)
NOTE PAYABLE LONG TERM .................... (2,756) (2,483)
PROCEEDS FROM LONG TERM BORROWINGS ........ 3,500,000
PRINCIPAL PAYMENT ON SHORT TERM BORROWINGS (447,168)
PRINCIPAL PAYMENT ON LONG TERM DEBT ...... (114,000) (2,345,500)
STOCK OPTIONS ............................. 4,893
DIVIDENDS PAYABLE ......................... (109,976) (85,684)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES ........................... (354,502) 308,140
INCREASE (DECREASE) IN CASH .................... (31,295) 2,559
CASH BEGINNING ................................ 150,679 40,445
CASH ENDING ................................... 119,384 43,004
</TABLE>
<PAGE>
BALCHEM CORPORATION
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED)
INCOME STATEMENT
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE THREE MONTHS ENDED
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3/31/96 3/31/95 % 3/31/96 12/31/95 %
------- ------- - ------- -------- -
<S> <C> <C> <C> <C> <C> <C>
SALES & OTHER REVENUES 6,341,871 5,937,023 6.8% 6,341,871 6,736,542 -5.9%
COST OF SALES 3,207,133 3,247,920 -1.3% 3,207,133 3,550,451 -9.7%
INTEREST EXPENSE 74,193 87,474 -15.2% 74,193 78,306 -5.3%
OTHER EXPENSES 2,392,662 2,062,101 16.0% 2,392,662 2,424,021 -1.3%
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OPERATING COSTS AND EXPENSES 5,673,988 5,397,495 5.1% 5,673,988 6,052,778 -6.3%
PRE - TAX OPERATING EARNINGS 667,883 539,528 23.8% 667,883 683,764 -2.3%
INCOME TAXES 233,277 187,495 233,277 240,125
NET INCOME 434,606 352,033 23.5% 434,606 443,639 -2.0%
NUMBER OF OUTSTANDING SHARES(*) 3,143,691 3,120,059 3,143,691 3,142,176
EARNINGS PER SHARE
BEFORE TAXES 0.212 0.173 0.212 0.218
AFTER TAXES 0.138 0.113 0.138 0.141
</TABLE>
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
REVENUES
REVENUES INCREASED 6.8% FOR THE QUARTER ENDING 3/31/96 VS. THE QUARTER ENDING
3/31/95 WHICH IS ATTRIBUTED TO INCREASED PURCHASES BY ESTABLISHED CUSTOMER BASE
AND THE COMMERCIALIZATION OF DOMESTIC AND INTERNATIONAL PROSPECTS.
REVENUES DECREASED 5.9% COMPARING 1Q '96 TO 4Q '95 AS A RESULT OF THE
DISCONTINUANCE OF THE CUSTOM MANUFACTURING OPERATIONS AT THE GREEN POND, SOUTH
CAROLINA FACILITY.
OPERATIONAL COSTS AND EXPENSES
COST OF SALES DECREASED 1.3% COMPARING THE QUARTER ENDED 3/31/96 AND 3/31/95 AND
9.7% FROM 4Q '95 TO 1Q '96 AS RESULT OF DECLINE IN PRICING OF CERTAIN RAW
MATERIALS AND REDUCTION IN ENVIRONMENTAL ACCRUALS FOR THE AFOREMENTIONED PERIOD.
INTEREST EXPENSE DECREASED 15.2% FOR THE QUARTER ENDED 3/31/96 COMPARED TO THE
QUARTER ENDED 3/31/95 AND 5.3% FROM THE 4Q '95 TO THE 1Q '96 AS A RESULT OF
MINIMUM BORROWINGS ON THE CREDIT LINE AND REDUCTION IN THE PRIME LENDING RATE.
OTHER EXPENSES INCREASED 16% COMPARING THE QUARTER ENDED 3/31/96 TO 3/31/95
WHICH ARE ATTRIBUTED TO EXPENSES ASSOCIATED WITH THE HIRING OF PROFESSIONALS
INCLUDING RECRUITING, RELOCATION, SALARIES AND BENEFITS ASSOCIATED WITH SAME.
OTHER AREAS OF INCREASED EXPENSE WERE BENEFITS (HEALTH INSURANCE, 401K AND
PENSION), OUTSIDE RESEARCH TESTING AND INCREASED TRAVEL EXPENSE BY SALES
PERSONNEL IN BOTH DOMESTIC AND INTERNATIONAL MARKETS.
PRE TAX EARNINGS
PRE TAX EARNINGS INCREASED 23.8% FOR THE QUARTER ENDED 3/31/96 VS. 3/31/95, AND
DECREASED 2.3% FROM THE 4Q '95 TO 1Q '96 AS A RESULT OF THE BUSINESS CONDITIONS
DESCRIBED.
<PAGE>
INVENTORIES
INVENTORIES AS STATED FOR THE PERIOD ENDED 3/31/96 and 3/31/95 WERE 2,228,280
AND 1,645,838 INCLUSIVE OF THE FOLLOWING BREAKDOWN.
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
RAW MATERIALS 1,061,834 764,410
FINISHED PRODUCT 1,166,446 881,428
WORK IN PROCESS -- --
TOTAL INVENTORY 2,228,280 1,645,838
</TABLE>
ADJUSTMENTS
IN THE OPINION OF MANAGEMENT, ACCOMPANYING FINANCIAL STATEMENTS ARE
REPRESENTATIVE OF ALL ADJUSTMENTS NECESSARY TO FAIRLY PRESENT THE CONSOLIDATED
FINANCIAL POSITION AS OF MARCH 31, 1996 AND MARCH 31, 1995.
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENT OF THE SECURITIES EXCHANGE ACT OF 1934 THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREWITH DULY AUTHORIZED.
BALCHEM CORPORATION
(REGISTRANT)
BY /S/ HERB WEISS
-----------------------
HERB WEISS
PRESIDENT, TREASURER AND
CHIEF FINANCIAL OFFICER
DATED: MAY 20, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 119,384
<SECURITIES> 0
<RECEIVABLES> 3,252,475
<ALLOWANCES> 0
<INVENTORY> 2,228,280
<CURRENT-ASSETS> 6,279,516
<PP&E> 14,056,098
<DEPRECIATION> 633,337
<TOTAL-ASSETS> 14,844,468
<CURRENT-LIABILITIES> 3,600,312
<BONDS> 0
0
0
<COMMON> 209,559
<OTHER-SE> 7,677,833
<TOTAL-LIABILITY-AND-EQUITY> 14,844,468
<SALES> 6,341,871
<TOTAL-REVENUES> 6,341,871
<CGS> 3,207,133
<TOTAL-COSTS> 5,673,988
<OTHER-EXPENSES> 2,392,662
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,193
<INCOME-PRETAX> 667,883
<INCOME-TAX> 233,277
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 434,606
<EPS-PRIMARY> .212
<EPS-DILUTED> .138
</TABLE>
